Build a Short Synthetic Future Strategy
What is a short synthetic future?
BearishNearly Unlimited ProfitUnlimited Loss
This strategy recreates the risk profile of a short stock position by selling an at-the-money call and buying an at-the-money put. It is usually established as a very small credit or debit.
Remember that because this strategy has a short call, it has assignment risk.
- Buy a put at strike A
- Sell a call at strike A